The company released the third quarter report of 2023 that in 23 years, Q1-Q3 realized revenue of 1.011 billion yuan, an increase of 3.58%, a net profit of 108 million yuan, an increase of 1.74%, and a contract liability of 72 million yuan, an increase of 52.01%, mainly due to an increase in advance payment. In a single quarter, 23Q3 achieved a revenue of 344 million yuan, a decrease of 5.79%, and a net profit of 42 million yuan, a decrease of 12.57%.

Q3 gross profit margin has increased significantly, the product structure has been continuously optimized, and the high-end trend of cold acid products has been upgraded.

In terms of gross profit margin, the company's 23Q3 achieved a gross profit margin of 46.88%, with an increase of 6.04pct, a month-on-month increase of 2.46pct Q1-Q3 gross profit margin of 44.19%, an increase of 2.77pct; the company's gross profit margin improved year-on-year, month-on-month improvement, the company continued to promote product structure improvement, brand upgrading.

Continue to invest in sales expenses, operating cash flow performance is beautiful.

The 23Q3 sales, management, R & D, and financial expense rates were 26.31%, 4.03%, 3.89%, 1.15%, respectively, with year-on-year changes + 4.03pct, "0.4pct," 1.46pct, Q1-Q3, 23 years, 26.22%, 4.36, 3.29, and 1.21%, respectively, and + 2.38pct/0.36pct/+0.6pct/-0.38pct. In terms of expense rate, the investment in sales expenses has increased, while the decline in financial expense rate is mainly due to the increase in time deposits and the simultaneous increase in interest income. In terms of net profit, the company's 23Q3 return net interest rate is 12.11%, minus 0.94 PCT Q1-Q3 23 years to achieve a home net interest rate of 10.65%, with the same minus 0.19pct. In terms of operation, the cash flow of operating activities of the company's 23-year Q1-Q3 was 95 million yuan, an increase of 207%, and the operating cash flow performed beautifully.

Adjust the earnings forecast to maintain the "buy" rating.

The company's product card position anti-sensitive subdivision track, cold acid Ling anti-sensitive toothpaste offline retail market share of 60%. To expand the penetration of children's oral care products and electric, oral medical and beauty care products, with cold acid Ling and Dengkang brand as the basic plate, multi-brand matrix blossoms. Taking into account the pressure on the growth of the overall oral retail industry, the income growth rate in 23-25 is adjusted, and the annual net profit of homing in 23-24-25 is expected to be 1.5 million, respectively, with a year-on-year increase of 15%, 22%, 17%, 23, and 23, respectively, corresponding to a 25-year PE of 33, 27 and 23X, respectively.

Risk tips: intensified market competition; raw material price fluctuations; R & D and new product development; accounts receivable management; less circulating share capital of secondary new shares, the risk of stock price fluctuations in the short term, and so on.